Page 48 - TODAY magazine Issue 1 2021

WHAT TO KNOW ABOUT BUYING
A HOME
You can cut out transfer duty. The threshold
for transfer duties is
R1 million. This means
that if you buy a property
for R1 million or less, you
won’t have to pay transfer
duty. Above R1 million,
it will be calculated on a
sliding scale, starting at
3% of the price.
Your credit record is
important. It’s what
banks use to ‘score’ you
when deciding what
interest rate to charge
you on a home loan.
For example, if you earn
R10 000 a month and
will be charged interest
at prime plus 1% (8%),
you can buy a house
priced at R298 886 with
a repayment of R2 500
a month over 20 years.
However, if you had a
better credit score and the
bank granted you a loan
at just 1% less (7%), you
could buy a house priced
at R322 456 and still
only pay R2 500 a month
over 20 years.
Know what you can
afford. All major banks
and lenders have
home loan affordability
calculators. Working out
what you can realistically
afford will spare you the
heartache of discovering that you can no longer keep up with the bond repayments a year or three later.
Build in an interest rate buffer. When calculating what you can afford, build in a buffer of R500 to R1 000 to account for interest rate movements. Most home loans are given for 20 to 30 years and interest rates will certainly move up and down in that time.
Remember the extras.
Find out what the current municipal rates are on the property and, if it’s a sectional title property, what
the monthly levy will be. As the owner,
you will have to take out homeowners’ insurance, so get quotes before
signing an offer to purchase. Also factor in expenses, such
as repainting your home every few years. Otherwise consider a facebrick home that doesn’t need to be painted.
QUESTIONS TO ASK BEFORE YOU RENT
• What deposit is
required and what are the additional costs, such as electricity and water? If it’s in a block of flats or a development, is parking included or do you have to rent a garage or bay?
• Will you be allowed to terminate the lease early if you have to, and will there be any penalties?
• Is there safe visitors’ parking available?
• What is the morning and afternoon traffic like? If you have children, you might want to be near schools, but if you are single, you might prefer not to be.
• How many burglaries have there been at the property in the last two years?
• Who will pay for the home security alarm system – you or your landlord?
YOUR WEALTH // PROPERTY
WHAT IS A PENSION-BACKED HOME LOAN?
In terms of the Pension Funds Act, members of pension and provident funds may use these investments as surety to take out a home loan, something which Old Mutual SuperFund allows members to do.
It can be used to buy or improve an existing home or to buy property to build a new home on. It has to be for you and your family to live and you cannot use this facility to, for instance, buy a second property to let out.
The amount you may borrow is limited to a percentage (usually 50% to 60%) of the lump sum payout you would receive from the fund if you had resigned. If you are 10 years or less from retirement, the amount decreases to 25%.
If you qualify for the government’s Finance Linked Individual Subsidy Programme (FLISP), you may use it, or a regular mortgage loan, in conjunction with the loan granted against your pension or provident fund.
Please note, though, that when you retire, the amount you owe will be deducted from your benefit. If your home is not yet paid off, you will also have to take out a new loan for the outstanding amount.
Other conditions apply, too, and it’s important to understand what housing loan surety involves before applying.
For more details, call Old Mutual Corporate on 0860 38 88 73.
SURETY
noun
Surety is the guarantee of one party’s debts by another. It could be an organisation or person that assumes the responsibility of paying the debt in case the borrower defaults or is unable to make the payments. – Investopedia.com
// 46 // ISSUE ONE 2021
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